In the year 2004, three students from Harvard University Duskin Moskovitz, Mark Zuckerberg and Chris Hughes designed a website in order to keep students connected with each other and help them make new friends and share their pictures and other media content. Initially, they named it thefacebook.com. Throughout the campus, the site became very much popular within a short time. Within a month, they expanded the site to connect students from Columbia, Stanford and Yale. Students across the US from 800 college networks joined the network by 2005. The social media site seen tremendous growth with over 5 million active members. The site re-titled as “Facebook” in August 2005.
Originally, Facebook was designed for accommodating college students. But now, it welcomes everyone to join in. Even though the scope of website is beyond social connectivity, its purpose is still the same. It gives the way of information sharing in a more engaging and interactive way. Facebook is yet another popular social media site like MySpace. After signing up, Facebook allows users to create their profile, “Find Friends”, send messages, post photos and status updates, get notifications about others’ activities and share videos.
In addition, users can also join user groups of same interest, organized by school, workplace and college. It also allows users to categorize their friends on “Close Friends”, “Family” or “People from Work”. As of June 2014, Facebook grossed around 1.3 billion users. In February 2012, Facebook, Inc. held its public offering and started offering stock in public and reached the capitalization of around $104 billion.
Microsoft Alliance, Public Access & Speedy Growth
On 26th September 2006, Facebook started allowing everyone to join in, with age limit of 13 years or older, through a valid email address. Facebook had around 100000 business pages (where companies can promote their business and appeal customers) by 2007. Initially, they were known as group pages. But ‘Company Pages’ were the new concept and pages started rolling out in May 2009 for businesses.
On 24th October 2007, Microsoft acquired 1.6% share worth $240 billion on Facebook and gave total implied amount of $15 billion to Facebook. Microsoft had also bought rights to put their adverts on social media site. In October 2008, the social media giant announced to establish its headquarters in Dublin. In September 2009, Facebook made its positive cash flow for the first time.
After 2009, Facebook has witnessed significant traffic. In July 2010, the social media conglomerate announced 500 million active members. With this achievement, Facebook became the largest social network of the world. As per the data received by the company, half of the members use this site every day.
In November 2010, the worth of Facebook was $41 billion. Followed by Google and Amazon, Facebook became the 3rd largest online company in the US, after overtaking eBay. In the beginning of 2011, Facebook announced that they will shift their headquarters in Menlo Park which was the former campus of Sun Microsystems in California.
In March 2011, Facebook was reportedly removing around 20000 profiles every day which remain offline for security reasons to remove violations like graphic content, spam, and underage use.
How Facebook Makes Revenue?
Facebook mostly makes revenue from advertising. Basically, Facebook has lower CTR (Click-through Rate) for ads than various other bigger websites. As compared to other popular sites, Facebook witnessed just 1/5th number of clicks. According to Sarah Smith former Sales Manager (Online Sales Operations) of Facebook, the successful campaigns have CTR rates below 0.05% and that rates are likely to decrease by 2 weeks.
The main reason behind the low CTR of Facebook is that younger users enabled third-party tools for ad blocking and their expertise on avoiding ad messages. The main aim of the site is social communication instead of content viewing. Big According to a report, it is found that the population of teen users increased to 88% in December 2014 from 94% and 95% in 2013 and 2012 respectively.
For products and brands, there are some companies which reported click-through rate higher than 6.49% on pages for wall posts. By January 2014 end, the company announced its revenue data and claimed US $2.59 of revenue for 3 months. According to eMarketer (an independent market research firm), Facebook reported 5.7% of worldwide revenue from digital ads in the year 2013. For June 2014, the revenue increased to $2.68 billion which was around 67% of growth over 2013 second quarter.
Creating Third-Party Facebook Applications
Today, Facebook allows users to create their own apps. For this, you have to add Facebook Developer App on your profile. You should also store your app on web server because Facebook doesn’t host third-part applications. You can create desktop-based, web-based or mobile-based applications which can bring benefits from Facebook platform. You can create an application which is connected to your news feeds.
The application programming interface (API) of Facebook relies on REST (Representational State Transfer) interface. Applications interfacing with the site send calls through HTTP, POST or GET requests. POST adds information to current webpage, GET tracks data and HTTP is Hypertext Transfer Protocol used by the web. This way, Facebook third-party applications can get gather data from profiles and send messages to profiles.
Like Structured Query Language (SQL), Facebook Query Language (FQL) can also be used to collect information from databases. Developer can easily collect information about the users who download his application. This way, developers use this data to make the list of target audience and make their client-base for promoting a specific product.
The Social Impact of Facebook
Facebook played a huge role in changing the daily social lives and activities of people in numerous ways. Users started staying connected to their relatives, friends and acquaintances through their mobile devices, irrespective of their actual locations. Facebook also connects people with same taste and/or interests through different pages and groups. It has also played a great role to reconnect lost friends and family members with its enhanced reach. A best example of this reunion is when John Watson found her daughter after 20 years through her Facebook profile.